At PTC’26 in Hawaii, a panel of hyperscale and wholesale operators comprising Google, Meta, EXA, and SCCN dissected the mounting pressures on Atlantic subsea infrastructure. With spiralling AI traffic, impending end-of-life systems, and hyperscalers dominating new builds, the industry faces a wholesale supply crunch.
In sum – what to know:
Supply crunch – with seven of 21 Atlantic cables nearing retirement and hyperscalers prioritizing internal demand, the industry faces a potential shortfall in trans-Atlantic wholesale capacity by 2027.
Mesh diversity – distributed landings have created a resilient “switching mesh”, but a lack of new transatlantic routes to them means rising AI-driven demand could soon overwhelm the system.
Subsea tensions – hyperscalers increasingly build subsea cables to meet their own traffic needs, leaving wholesalers reliant on leftover capacity, raising questions about who invests, builds, benefits.
Here’s a quick snapshot of an excellent workshop-panel session about subsea cable in the AI era at PTC’26 in Hawaii last week (January 18), which covered the gamut of strategy and intrigue, and all sorts of other shenanigans, as the subsea industry gets to grips with the challenge to transport ever-higher volumes of data traffic around the world. Note, this is not a full report of the session; there was too much to fit in a single article (and RCR may pick up the thread again). But here is a run-down of some of the main points, as presented by a quality mix of hyperscale providers (Google, Meta) and wholesale operators (EXA Infrastructure, Southern Cross Cable Network).
The initial focus was about trans-Atlantic infrastructure – given the previous session’s take on the Pacific, addressed later here as well, and because the region brings certain tensions in the subsea sector into sharpest focus, especially as AI explodes business models and traffic patterns. These include issues with the ownership and operation of subseas routes, amid the power-shift to money-bags hyperscalers with escalating private demand, as well as with government intervention to fund and protect ‘critical’ infrastructure in a fractured geopolitical climate. The panel was well stewarded by Thomas Soerensen, in charge of global subsea solutions at fibre-optic vendor Ciena.
The big point, from the start, is that a crunch is coming in this old subsea-stronghold. Jim Fagan, chief executive at EXA Infrastructure, said: “The reason the Atlantic isn’t spoken about as much as the Pacific, or the Red Sea, is that it’s just not the sexiest cable region. It’s considered nice and consistent; it is the world’s highest traffic route.” There are 21 individual cables in the Atlantic, “east to west”, noted Nigel Bayliff, senior director for global submarine networks at Google. “We should pat ourselves on the back. We’ve helped the world survive this huge influx of data [so far].” Capacity per cable has jumped by “279,000 times” since the first PTAT line was landed in 1988, he said.
“We’ve helped as much as we can.” But the system is at full stretch. Seven of its 21 routes will be retired “relatively soon”, said Bayliff. “That is a problem because that starts to reduce that reliability mesh” – meaning network resiliency from network diversity. Plus, of course, the AI phenomenon is driving traffic demand through the roof. For its part, EXA Infrastructure carried four times as much traffic on its Atlantic channels in 2025 than it did in the previous three years combined (2022-2024), suggested Fagan. This is partly because it has picked up three routes via the purchase of Irish subsea specialist Aqua Comms for a knockdown fee. But the pattern is clear, he said.
“We’re seeing the growth, and I’d love to say it’s because we’re crushing it, but all the boats are rising.” There is another issue: the industry has built route diversity, even as the number of Atlantic crossings has stuttered to a halt, with distributed landings and coastal mesh connectivity spreading traffic along the coasts, rather than concentrating it in a handful of hubs. Bailiff commented: “The thing that’s changed [in the Atlantic] over quite a long period is this move to distributed landings. Going back 10/20 years, traffic was very concentrated. To spread traffic up and down the western seaboard of Europe and the Eastern seaboard of North America, there have been lots of new routes.”
The effect has been to create ‘mesh’ value over point-to-point capacity, and pivot subsea lanes towards traffic flexibility, failover optionality, and geographic diversity. Even if the number of ocean cables has been flat, and may yet decline, the number of usable paths has increased with more landings per system (and better optical reach). It underscores the problem: the system count is static, as yet, and these distributed landings stretch the system. The industry has compensated for fewer systems by being smarter with where it lands them; the mesh masks fragility, in a way – until it is overwhelmed with AI-style demand, and it doesn’t, and the whole thing topples over.
“More cables is definitely the answer,” said Bayliff. “The challenge is going to be how many we can build, and how quickly [we can build them] to as many diverse points as possible. That is the only way forward.” More landings, as well – is the instruction. Shifting focus, he said later: “However they’re built, whoever’s building them, more cables to generally the same location – so we can create these switching meshes – is the way forward.” But that last point, about who builds new crossings, is a bone of contention. For Fagan at EXA Infrastructure, the question is not just theoretical: his firm owns the two newest “non-hyperscaler” routes across the Atlantic, and wants to build more.
The tension, bubbling under on the panel at PTC, is that wholesalers like EXA Infrastructure and Southern Cross Cable Network have traditionally built cables and sold capacity to carriers, telcos, and also to hyperscalers. But for a decade, since the cloud became more than just a consumer repository for smartphone photos, hyperscalers have built most of the new trans-Atlantic and trans-Pacific subsea infrastructure themselves. Since AI has started to spike uncontrollably, their agenda has shifted – to build for their own needs first, keep any excess for internal traffic, and only release it to the wholesale market as a last resort.
Fagan stated: “My friends here (Google and Meta, on the panel)… talk [in their announcements about new subsea systems] about their needs and what they’re going to keep. So we are facing a severe supply crunch in the Atlantic, probably late 2027. If you think about the [new] data center traffic and flows, it is going to create quite a problem. At this point, the question is how to make sure there is enough wholesale capacity for the rest of the market. And for us, we think maybe it is time for private cable again. Which is not something I said here two years ago. So the dynamics have changed quite a bit in the Atlantic – from just kind of a set-and-forget for the last 20 plus years.”
Which, like we warned at the top of the piece, brings us to a premature stop; RCR needs to file this story before it is finished. Hopefully we will write more from this fascinating panel session at PTC, with some expansion on this wholesale/hyperscale tension with commentary as well from Southern Cross Cable Network and Meta, plus the collective narrative around the realities of route planning – based on permits rather than physics, and on hyperscaler “insurance cables” that don’t make commercial sense – as well as the “double-edged sword” of government designation of the sector as ‘critical infrastructure’. Like we said, good panel, lots to digest.
